Updated 7/17/2025
NewMarket Corporation (NEU), headquartered in Richmond, Virginia, is a global leader in petroleum additives, supplying essential chemical components for engines, industrial equipment, and transport systems. With a long-tenured management team and a strong track record of capital discipline, the company has consistently delivered solid earnings, robust free cash flow, and reliable dividend payments.
The stock has gained over 30% in the past year and currently trades near all-time highs, supported by expanding margins, strong operational cash flow, and targeted growth investments like the AMPAC expansion. With a conservative payout ratio, steady dividend growth, and efficient balance sheet management, NewMarket continues to reward long-term, income-focused investors.
Recent Events
NewMarket’s stock has had an impressive 12-month stretch, up over 30% while the broader market pushed ahead more modestly. It’s recently been trading near its all-time highs, which is no fluke. This strength is supported by solid business fundamentals, not speculation.
In the most recent quarter, the company posted healthy earnings. Revenue saw a small increase, but earnings were what really moved the needle—up nearly 17% year-over-year. That came from better efficiency and stronger margins, which are now sitting at 24.66% on the operating line. Net income also looked strong, with EPS reaching $50.28 on a trailing basis.
That profitability is backed by smart balance sheet management. The current ratio stands at 2.84, and operating cash flow over the past twelve months hit $537 million. There’s no shortage of liquidity here. Even with $1.06 billion in total debt, the company is not stretching itself thin. It’s generating enough free cash to not only meet obligations but also return capital to shareholders.
Key Dividend Metrics
📈 Forward Yield: 1.59%
💵 Annual Dividend: $11.00
📆 Last Dividend Paid: July 1, 2025
📅 Ex-Dividend Date: June 16, 2025
🧮 Payout Ratio: 20.4%
📊 5-Year Average Yield: 2.10%
📉 Trailing Yield: 1.40%
🚀 Dividend Growth Trend: Gradual and steady
Dividend Overview
If you’re looking for yield over flash, NEU might be worth watching. Its dividend doesn’t jump out at first glance—the current forward yield sits at 1.59%—but dig a little deeper, and there’s a lot to like.
The company pays out $11.00 per share annually, and it does so with remarkable consistency. There are no big jumps or dips, just steady progress. Management seems focused on keeping payouts sustainable, not overly generous. That approach shows up in the payout ratio, which is a lean 20.4%. They’re not forcing the issue—they’re simply sharing profits in a smart, measured way.
Despite operating in a cyclical sector, NEU has managed to keep its dividend story free of drama. There have been no cuts, no panic, just consistent payouts supported by free cash flow and solid earnings. That kind of quiet reliability doesn’t make headlines, but for dividend investors, it’s a big plus.
The company’s beta is just 0.43, which means the stock isn’t overly sensitive to broader market swings. For anyone trying to build a portfolio with a smoother ride, that low volatility adds another layer of appeal.
Dividend Growth and Safety
NewMarket is careful with its dividend strategy, and that caution is part of what makes it so dependable. A 20.4% payout ratio gives the company plenty of breathing room. Even in a tough year, they’d have space to keep distributions going without straining the business.
Cash flow tells a similar story. With $537 million in operating cash flow and over $443 million in levered free cash flow, they have more than enough to support the roughly $104 million in annual dividend payments. That’s over four times coverage—a sign of real strength.
Debt is present, but manageable. The $1.06 billion in total debt isn’t small, but when stacked against nearly $7 billion in market cap and strong cash generation, it’s not a concern. Return on equity is sky-high at nearly 36%, and return on assets sits at 12.81%, showing they’re putting capital to work efficiently.
As for dividend growth, it’s been gradual but consistent. Over the past five years, the average yield was a bit higher than today’s, reflecting a lower stock price back then. But the actual payout has been creeping higher, bit by bit. Management doesn’t chase headlines with massive hikes, but they also haven’t missed a beat when it comes to raising the dividend.
With a short interest ratio of just 1.27, there’s no sign that investors are betting heavily against this name. In fact, institutions hold about 65% of the float, and insiders own nearly 27% of the shares. That kind of alignment is rare—and encouraging.
All in all, NewMarket offers a different kind of dividend story. It’s not the biggest yield out there, and it doesn’t market itself as a dividend powerhouse. But its quiet consistency, rock-solid fundamentals, and clear commitment to shareholder returns make it a steady, reliable option for income-focused investors who are in it for the long haul.
Cash Flow Statement
NewMarket’s trailing twelve-month cash flow tells a story of strong, internally generated liquidity. The company brought in $537 million in operating cash flow during this period—an uptick from the prior year and a clear sign that the core business remains a dependable cash engine. Free cash flow came in at $480 million, staying robust even as capital expenditures edged slightly higher to $56.7 million. That kind of free cash flow performance gives the company considerable flexibility to manage debt, return capital to shareholders, and reinvest without external pressure.
On the investing side, cash outflows were modest at just over $54 million. This is a sharp contrast to the heavy investment outlay seen in 2023, when investing cash flow dipped by more than $700 million. Financing activity, however, was significantly negative in the latest TTM, with outflows of $484 million largely due to debt reduction and share repurchases. Cash on hand at the end of the period landed at nearly $116 million, up from the prior year. Taken together, these figures highlight NewMarket’s disciplined capital strategy, strong free cash flow generation, and ongoing efforts to fine-tune its balance sheet while supporting shareholder value.
Analyst Ratings
In recent months, analysts have slightly dialed back their expectations for NewMarket (NEU). The average consensus price target is now hovering around 💰 $515. While still solid, this marks a step down from earlier projections, reflecting a more tempered outlook. It’s not a vote of no confidence—just a recognition that after such a strong run in the share price, the near-term upside might be more limited.
The tone among analysts has shifted toward a neutral stance. While there haven’t been many formal downgrades, several research desks have quietly moved to a hold recommendation. The reasoning is fairly straightforward: the fundamentals remain sound, but the stock is now trading near its highs 📈 and growth appears to be stabilizing. That doesn’t suggest trouble—just that expectations needed to be reined in a bit.
What continues to stand out is the dividend profile. NEU’s free cash flow supports its payouts comfortably 🏦, and that remains a key attraction for many income-focused investors. But from a valuation standpoint, analysts see less room for significant multiple expansion in the short term. So while the company is doing everything right operationally, the stock’s recent climb has likely done most of the heavy lifting for now.
Earning Report Summary
Solid Profits, Even With Flat Sales
NewMarket’s latest quarter delivered a familiar mix of consistency and quiet strength. Net income rose to $125.9 million, which works out to about $13.26 per share. That’s up nicely from $107.7 million and $11.23 per share a year ago. Revenue didn’t really move—it held steady at just over $700 million. But even with sales staying flat, the company kept earnings on the upswing, thanks in large part to smart cost management and stronger operational efficiency.
Petroleum additives, which are the company’s bread and butter, saw a small drop in volumes. Still, the margin profile stayed healthy, showing how tightly the team is running the business. Over in specialty materials, things really picked up. That side of the business, which had been posting losses, swung into the black this quarter. A big part of that was stronger performance from AMPAC, their ammonium perchlorate unit, which plays into aerospace and defense supply chains.
Future Growth Tied to Defense and Space
Leadership spent a good portion of the earnings call talking about AMPAC and where it’s headed. The company is putting about $100 million into expanding the Cedar City facility, aiming to increase production capacity by more than 50% over the next couple of years. This isn’t just a capacity play—it’s a long-term bet on growing demand in sectors like national defense and space exploration. They were pretty clear that this investment isn’t a one-off but part of a broader strategy to grow that side of the business.
There was also a steady hand on the financial controls. Operating cash flow remained strong, giving them the flexibility to keep returning capital to shareholders through dividends and buybacks. Even with some unevenness in volumes, the message from management was one of quiet confidence. They’re not chasing big headlines or swinging for the fences. Instead, they’re keeping things tight operationally while making selective, forward-thinking bets where they see real opportunity.
Management Team
NewMarket’s leadership has built a reputation for quiet discipline. Thomas Gottwald, the company’s CEO since 2004, has overseen the business through various economic cycles without chasing headlines or unnecessary risks. His approach has been consistent—prioritizing capital efficiency, stable operations, and long-term shareholder value. That mindset has helped establish NewMarket as a dependable name in the specialty chemicals space.
The management style across the executive team reflects a focus on execution rather than flash. There’s little public fanfare, but results speak clearly. They’ve shown a steady hand, especially during market volatility, by sticking to a strategy that emphasizes organic growth, responsible capital spending, and maintaining strong margins. The fact that insiders hold a meaningful stake in the company further aligns leadership’s interests with long-term shareholders.
Valuation and Stock Performance
NewMarket shares have seen a strong run over the past year, climbing more than 30 percent and nearing all-time highs. The stock is trading close to $737, a testament to how well the company has been executing despite a flat revenue backdrop. It’s outpaced broader indexes during this time, partly due to investor demand for steady, cash-generating businesses.
Looking at valuation, the trailing price-to-earnings ratio of around 14.5 suggests the stock isn’t cheap, but it isn’t expensive either. For a company delivering return on equity above 35 percent, that multiple seems fair. The price-to-book ratio of 4.5 also reflects the strong profitability of the business, even if it looks elevated compared to companies in more asset-heavy sectors.
Enterprise value to EBITDA is just under 10, right in the expected range for a company with consistent cash flows and strong margins. The price-to-sales ratio sits around 2.5, which is within reasonable bounds, especially when you consider how much of that revenue converts to actual profit. With a relatively small float and high levels of insider and institutional ownership, the stock tends to trade with stability.
Risks and Considerations
NewMarket faces several risks that are worth keeping in mind. Its primary business—petroleum additives—is closely tied to industrial production and the global automotive sector. If there’s a downturn in either, volume could take a hit. While the specialty chemicals division is growing, it still makes up a smaller piece of the pie, so there’s some exposure to concentration risk.
Input costs can also be a factor. Rising raw material expenses or supply chain disruptions could squeeze margins. Regulatory changes, particularly around emissions and environmental standards, may lead to shifts in demand or require costly compliance updates.
Debt is another consideration. The company carries over $1 billion in total debt. While cash flow easily supports it now, sustained higher interest rates or refinancing at less favorable terms could have an impact. So far, NewMarket’s balance sheet remains strong, and management has shown they can manage debt prudently.
Final Thoughts
NewMarket isn’t trying to be something it’s not. It sticks to what it knows: producing essential chemical additives, operating efficiently, and delivering steady returns to shareholders. That focus has worked, and for income-minded investors, the reliability stands out in a market full of noise.
What makes NewMarket compelling isn’t growth for growth’s sake. It’s the quality of its execution, its ability to generate cash, and the quiet confidence with which it approaches expansion. The investment in AMPAC is a good example—long-term focused, tied to real demand in aerospace and defense, and structured to complement rather than distract from the core business.
The stock’s valuation reflects this quality, but doesn’t overstate it. While it may not offer explosive upside, it presents a stable foundation for investors looking to compound wealth through consistent dividends and disciplined management.
For those who value predictability and proven performance, NewMarket remains a name that earns its place in a dividend-focused portfolio.